<p>NJRes, maybe I will be in your situation. Any tax credits I should be looking for?</p>
<p>Maybe so, stevesma. I didn’t read it that precisely, I just assumed she didn’t mean that was the total that the employer paid, but after the amount the employer paid. Half the time I don’t mean exactly how something reads, myself. That would be an amazing plan at 1K/yr for both employee and employer, but of course we know that someone is paying far more than that.</p>
<p>Does anyone understand this portion of the fiscal cliff bill, if the House passes it?</p>
<p>“Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.”</p>
<p>What does that mean in actual numbers? I can’t find an exact explanation or a calculator to run anywhere, just that phrase listed, repetitively. Is that a miniscule amount, or does that massively limit the amount of deductions one can have, based on income?</p>
<p>You’d need to find some really old income tax worksheets.</p>
<p>I just looked through my 1996 to 2000 returns and I didn’t keep the booklets. Maybe you can find them online.</p>
<p>Here is a pretty good explanation:</p>
<p>[TPC</a> Tax Topics | 2013 Budget - Reinstate Personal Exemption Phaseout and Limitation on Itemized Deductions](<a href=“http://www.taxpolicycenter.org/taxtopics/2013-Reinstate-Personal-Exemption.cfm]TPC”>http://www.taxpolicycenter.org/taxtopics/2013-Reinstate-Personal-Exemption.cfm)</p>
<p>From that article:</p>
<p>
</p>
<p>Personal exemptions for a family of 4 is about $14K; itemized deductions, who knows, but for high income taxpayers - $100K?</p>
<p>The loss of $93K in deductions at the 39.6% bracket is, what, about $36K in extra taxes?</p>
<p>It will take about 120K of income over the threshold to lose all of the personal exemption deduction.</p>
<p>It would take $2.7 million in income to lose 80% of $100K of itemized deductions.</p>
<p>That is still confusing to me. So if you can’t get the personal exemptions for a family of 4, worth about 14K (so 39.6% tax on that would be an additional 5.5K), I guess. </p>
<p>Plus there is this statement: “Taxpayers would have their itemized deductions reduced in 2013 by 3 percent of their income over the same thresholds but not by more than 80 percent. Both phaseouts would increase marginal tax rates for taxpayers in the affected income ranges.”</p>
<p>So for example on a 600K salary, for the amount over 300K, their deductions would be reduced by 9K? Then for that same person, rates would go up from 35-39.6% (on the amounts between 450-600K), increasing their tax by about 7.5K.</p>
<p>Totaling 5.5K+9K+7.5K= 22K?</p>
<p>Am I missing something here, or does that make sense? Usually they have all sorts of calculators on this stuff instantly.</p>
<p>Reducing your deductions by $9K would lead to $3.6K in added tax if you are in the 39.6% bracket.</p>
<p>So your total should be about $16.5K or so.</p>
<p>The limit where itemized deductions starts to phase out will be $261K, not $300K.</p>
<p>Okay, I thought I had read it that deductions would start to phase out at 300K. Well, I guess who knows what is going to happen in the end for anyone. All I can tell so far, is that it seems like it would be a good year to work a lot less and cut down on expenses. Not so great for the economy though.</p>
<p>I wouldn’t worry about your tax deductions. This will not go through and the sh** will hit the fan.</p>
<p>Amt adjustments will occur every year…including 2012</p>
<p>Are you ok with this notrichenough?</p>
<p>Me and 35 million others.</p>
<p>I’d rather see it abolished completely.</p>
<p>If we raise taxes enough, amt won’t be necessary. ;)</p>
<p>By the way, won’t the tax increases be lower than those in your example if a taxpayer is psying amt?</p>
<p>“I wouldn’t worry about your tax deductions. This will not go through and the ____ will hit the fan.”</p>
<p>Looks like it may go that way.</p>
<p>If you take the 600K salary example and assuming notrichenough is correct about the tax going up 16.5K, and compare it to the proposed tax rate increase on people making over 250K (4.9% increase on 350K= 16.1K), the new proposed tax rate increase, at least on this salary, is the same or greater. While appearing as if it was some sort of compromise to make taxes go up on a higher income than proposed, it really is the same deal. With no spending cuts. And still barely raising taxes on those rich donors (from 15% to 20%), so as to not raise taxes much on the truly wealthy.</p>
<p>I think the senate was suckered. Not that I want to go into tax hike Armageddon for everyone, but this was no compromise, it was voted through because of panic.</p>
<p>I wish this was all over.</p>
<p>
Well, sure, because by definition if you are paying AMT you are already paying more. But at some point everyone gets out of AMT because the the AMT rate tops out at 28%, which is well below the highest marginal rate. I think this happens at around $400K, it’s hard to say exactly.</p>
<p>
No, because if we go over the cliff, the exemption and itemized deduction phase-outs happen as well, and at lower income levels for the itemized deduction part - that would start at around $175K.</p>
<p>
That’s a 33% increase, I wouldn’t say that is nothing.</p>
<p>Yes, believe me I don’t want all the things that are scheduled to happen to continue on, not for me or anyone else. But I do think it is the same deal that has been pushed lately, not the deal we’d get going off the cliff.</p>
<p>And while a 33% increase may be plenty, 20% cap gains rate is still very favorable treatment compared to those who are getting ordinary income from working, paying 39.6%.</p>
<p>Well, looks like people can rest easy tonight.</p>
<p>Personally, I’m going to finish drinking my glass of wine and go to bed early. Tomorrow we are going to contemplate what we are going to do with the extra time off we’ll have in upcoming years, and how we can cut costs. Better to have more free time than to work to fund the government.</p>
<p>That’s what I did. I worked less in my life. I worked part time for 19 of the last 24 years. Not because of taxes, though. Time is worth more than money. Quitting because of taxes…</p>
<p>I am sure somebody would like your job. Resign tomorrow. Make two families happy.</p>
<p>Well, the problem is, you still need an income to pay the bills. Am I going to get the government to pay my kids tuition, my mortgage, vet bills, car insurance? How about health insurance? And how about this tasty glass of red wine I’m drinking, will they pay for that? Not eligible for medicare for a long, long time. And my company wouldn’t hire more people to fill our jobs. Other people would just work more, gladly. We could retire in 5 years, at 55, and still get a retirement. That, at least is worth waiting for.</p>
<p>But working part time for medical benefits and a lesser income could be attractive. I need to find a way to live cheaper. Maybe move from my $10 bottle of wine to a $6 one.</p>
<p>Medicare is a government program. You don’t want that. Stick with the private insurance companies. You will love the private insurance companies when you retire at age 55.</p>
<p>I am reading your posts and paying an additional 16,000 or so in taxes is upsetting you. So quit. Fine. Somebody will take your hours. You will pay less in taxes. You will have a lot less money too.</p>
<p>My wife won’t buy expensive wine. That is what friends are for. :)</p>
<p>I am not kidding. I have worked part time most of my life. My wife has volunteered for most of hers, but she is working full time now. I am sure she would like to make more money and pay more income taxes.</p>